How can I arrange for my life insurance to be automaticaly put in a trust for my kids?

Question

I was wondering how one would go about having the benifits from a life insurance policy put into a trust fund for her children. Say I wanted to leave each of my children with $150K in a trust fund that niether could touch until they are 21. Can I do this and prevent the guardian of the children from touching the money until the children are the age I have specified?

Is this the best way to go about it or should I leave the money to a responsible member of my family and ask them to put it in a trust and ask that they money only be used for college expenses until the kids are 21?

Answer 1

First you would have to establish a trust account for each of the children. The trust documents would spell out the terms. You would need to appoint a trustee for each account. The same person or institution can be named as trustee for each account. Finally, you would name the trust as the primary beneficiary of the insurance policy.

There may be better ways to do this, so you might want to talk to an attorney or estate planner.

Answer 2

Yes, that's the best way, and no, don't trust a family member, no matter how trustworthy they are, to handle something as you specify after your passing.

On your life insurance policy, there will be a beneficiary section.
Check with a trusted or trustworthy accountant or bank officer, and find out how to set up the trust fund based on the payout to the beneficiaries. While you are checking on that, ask the financial advisor if you put the trust fund as the beneficiary or the children. They will know all of the details as this is a common practice. All of the specifics for how the money will be allocated and disbursed will be written into the language of the trust fund itself. Make sure to specify everything about who gets it, when, how much at the time, and also, who does not get it (this can be in general terms - guardian, other relatives, friends, etc.)
The good thing about a trust fund is that it is totally separate from custodial issues. Nothing about guardianship can change the terms of a trust fund, only the person who set it up, or the payee(s) if it is specified that at a certain age they can change them.

Answer 3

Putting life insurance in a trust for the children is a good idea, but may not be the best way to provide for them. Suppose your guardian needs money to pay for braces or college tuition or some medical expense for the child and can not access the money. I certainly would advise consulting an attorney. Make sure the guardian can get some of the money to assist them in the added expense of raising your children.

Answer 4

OK, let's say, you leave the money to "a responsible member". You die, and a year later, that person dies, too. The money is NOW going to be part of their estate, and will be given to THEIR heirs. Will THEY use it and take care of your children?

Here's what to do: change the beneficiary clause to read, "the SMITH KIDS TRUST". Then you also need a will and guardianship papers for the kids, and the trust will need to be set up with the funds from the policy.

You need to set up the framework for the trust now, so that the trustees are NOT the guardians. And you WILL need a probate attorney to do all this so it's compliant with your state regulations.

Answer 5

Consideirng how much money we are talking about here I would contact a lawyer. They can certainy explain your rights and options is far greater detail than I. Since you have obviously thought this through I would suggest making sure your wishes are spelled out in explicit detail in both a will and verbally to your family members. Particularly the individual you have chosen to be the guardian for your children. Perhaps they can be involved in the decision maing as well.

Answer 6

There are a number of different types of trusts that could be used. You should definitely hire a lawyer than will specify the terms of the trust in the trust documents. Make sure you consider the tax implications of any trust you setup as well.

Answer 7

Hire lawyer, create trust
make trust the beneficiary of your insurance
file copies of all paperwork at local court house

done

Answer 8

Talk to a lawyer. No one here can answer your question. That would constitute the practice of law without a license.

Answer 9

You should contact a professional - talk to them and they will advise the best way forward.

Answer 10

Have a lawyer draw up a will for you and state this in the will. thats what I did.